True interest cost (TIC)

True interest cost (TIC),

Definition of True interest cost (TIC):

  1. True interest cost (TIC) is the real (total or actual) cost of taking out a loan. True interest cost includes all ancillary fees and costs, such as finance charges, possible late fees, discount points, and prepaid interest, along with factors related to the time value of money (TMV).

  2. Because TIC is commonly used in municipal bond offerings, it also may mean the "actual cost" of issuing a bond. Sometimes TIC may refer to a bond's "Canadian interest cost.".

  3. Total annual cost of obtaining debt financing, expressed as a percentage of the total debt amount. TIC includes all associated costs such as finance charges, term insurance, credit insurance, and cash discount lost.

How to use True interest cost (TIC) in a sentence?

  1. TIC is similar to net interest cost (NIC) in that it accounts for fees and charges; but unlike NIC, total interest cost also accounts for the time value of money (TVM).
  2. True interest cost (TIC) is the real total cost of taking out a loan. .
  3. The federal Truth in Lending Act requires lenders to disclose the true cost of credit to their borrowers and prospective borrowers in a consumer-loan agreement.

Meaning of True interest cost (TIC) & True interest cost (TIC) Definition